Tax follies

TAX FOLLIES…. The House has the luxury of operating by a fairly straightforward process. The Democratic leadership brought the tax-cut package it wanted to the floor yesterday, and passed it — no muss, no fuss. In the process, Dems made a political point, positioning conservatives as prioritizing massive tax breaks for the wealthy ahead of cuts for the middle class.

The Senate, as is always the case, is more complicated.

By late yesterday afternoon, the leadership in the upper chamber thought they had a plan in place. Senators would vote today on four separate tax-cut plans, giving members a chance to weigh in on all of the major proposals from both parties (except the Clinton-era-rates-for-everyone option). By around 10 p.m. last night, that deal was scrapped, and the leadership announced it would hold two tax-cut votes tomorrow.

[Senate Majority Leader Harry] Reid (D-Nev.) told reporters late Thursday that, following the collapse of the deal, the Senate is now poised to file cloture on only the two Democratic proposals, with a vote slated to take place on Saturday.

“We are disappointed that we couldn’t show the American public everything, but we think we can show the American people what the Democratic priorities are, and we are free to talk about what the Republican priorities are, because they told us today,” Reid said. […]

One of the proposals, put forth by Sen. Charles Schumer (D-N.Y.), would extend the cuts for income of $1 million or less. Another, from Sen. Max Baucus (D-Mont.), would extend the cuts on income of $250,000 or less for families and $200,000 or less for individuals.

As with yesterday’s House vote, Senate Democrats intend to bring these two measures to the floor to make a point — Dems are fighting for the middle class, and Republicans holding middle-class tax cuts hostage to protect breaks for the wealthy. Unlike yesterday’s House vote, the Democratic proposals in the Senate almost certainly won’t be able to overcome Republican obstructionist tactics.

And while all of this is unfolding on the Hill, the administration’s working group, tasked with striking some kind of deal on taxes, and led by Treasury Secretary Timothy Geithner and White House budget director Jack Lew, appears to be where the action is.

While direct participants in these talks insist there is no deal as of yet, multiple reports suggest the outlines of an agreement are coming together. Republicans would get a two-year extension on all Bush-era rates; Democrats would get a 13-month extension of federal unemployment benefits, and tax breaks included in the Recovery Act, including the Make Work Pay and college-tuition tax credits. The possibility of raising the debt ceiling now, as opposed to next year, also appears to be in the mix. (According to the NYT, the one thing the White House wants most in the negotiations is an extension of unemployment aid, which officials consider critical to the health of the economy.)

At this point, just about anything, including a complete breakdown in talks, can happen, but we should learn more today.